The draft decision was supported by 40 council members this week. Twenty-six members voted against, including all members of the Center Party.

Tallinn owns 2,845,973 shares, which will now be sold by the Tallinn Strategy Center, preferably at auction. The terms will be approved by the city government, based on a proposal from the center.

The market value will be determined by the price achieved at auction. If they are sold on the stock exchange, the value will be the price at which a specific transaction occurs.

On Wednesday, Coop Pank shares were trading at €1.97. Three months ago, the price was around €2.20.

Ossinovski: Share sale is required by law

Tallinn Mayor Jevgeni Ossinovski (SDE) told ERR that the sale of shares is required by law.

"According to the law, local governments may not hold securities, and the shares were obtained in a rather unusual way. When the cooperative bank created by Edgar Savisaar was liquidated, the city of Tallinn became one of the largest shareholders in Coop Pank. And in fact, the law requires that we sell these shares, so that is why we are selling them," Ossinovski said.

He added that the sale is not simple, as the volume of shares is large and liquidity on the Estonian stock exchange is limited. The finance department is now exploring the options.

"But in reality, there is no alternative to the sale because the law requires us to divest these shares," the mayor said. "There is no specific deadline, but it's obvious that a local government does not play on the stock market."

The money from the share sale will go to the city treasury, but it is not possible to specify into which budget line it will fit, Ossinovski said.

"This is a one-time revenue. As a result, we will borrow less from the bank and cover investment obligations with the proceeds. We have not planned to use this income for any specific purpose; it will go toward covering the city's existing obligations," said the mayor.

Priisalm: selling on the stock exchange is most efficient

ERR asked Peter Priisalm, partner at asset management firm Avaron, whether it makes sense to sell Coop Bank shares on the stock exchange, given the price decline.

"It's very difficult to give advice on timing, because none of us knows what the future holds. It's easy to look back and say they should have sold earlier when the price was higher," he said. "On the other hand, if the city had sold its shares during the IPO, it would have earned roughly half the amount. If the city needs the money for other purposes and the holding is not considered strategic, then exiting the investment seems reasonable,"

"In my view, selling shares on the stock exchange is very transparent. All market participants are informed, and if someone wants to acquire this holding, they can buy the shares through the exchange," Priisalm added.

The expert said selling on the exchange is the most efficient option under current conditions.

"The fact is that today, the Baltic stock exchange is dominated primarily by retail investors, with institutional investors being relatively few. If the shares end up in the hands of a large number of retail investors, then selling through the exchange is the most effective option," he said.

Priisalm also said that if there were likely strong interest from large investors in Coop Bank shares, the city could consider a directed sale to institutional investors.

"In such cases, large investors typically expect a certain discount when purchasing shares, which is usually around 5 to 8 percent for these types of transactions. Another drawback of this alternative is that someone interested in buying the shares might not be reached by the entity organizing the sale," he noted.

"Fund managers acquire and dispose of fund positions regularly via the exchange system. Liquidity is definitely a challenge on the Baltic exchange —some positions have to be sold over a long period, weeks or even months. However, the city doesn't need to sell a large volume all at once. They can sell 10 to 20 percent of the daily trading volume, which won't significantly affect the price. In the long term, this would increase the liquidity of Coop Bank shares, as the number of freely traded shares would grow," Priisalm added.

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